‘Not so great’: Inflation cools, but grocery costs remain high

Canada's inflation cooled significantly last month, but underneath the drop is a rise that has some experts tempering Canadians' expectations.

Cost of living is not rising in Canada and Alberta as quickly as last month, but a closer look at the cooling inflation rate isn’t as promising.

Canada’s inflation rate is 1.7 per cent, down from 2.3 per cent, and Alberta’s is 1.5 per cent, down from two per cent.

The drop in gas prices is what’s tapping the brakes on inflation.

Delivering packages in and around Calgary means Flash Express Courier spends a lot of money fuelling up vehicles.

“If not every day, definitely every day and a half, especially a van like this. It’s about $90 to fill,” said Drilon Beqa, owner of Flash Express Courier.

Removing the consumer carbon tax saves him a lot and lowers the fuel rate he charges his customers.

“Last year, we were paying, what was it? $1.70? $1.60? So when gas prices are at this rate, especially last month, $1.15, (it) makes everyone happier,” he said.

Gas prices fell 18.1 per cent year-over-year, thanks mostly to the federal government striking the tax at the start of the month.

Natural gas prices also fell 14.1 per cent annually in the month, but prices rose in other areas.

“At first glance it looked like a really great inflation report, but if you look closer … not so great,” said Mark Parsons, ATB Financial vice-president and chief economist.

“When you take out energy … inflation was up nearly three per cent.”

Calgarians buying groceries say they’re still feeling the pinch.

“It still seems as expensive as normal,” said Martin Hammond.

“Everywhere I shop, things are going up,” said Judy Johnson.

“(It) just feels like everything is still expensive—fruits, vegetables, meat,” said Melanie Martenz.

Food prices increased slightly from last month and continue to outpace overall inflation.

“Some things go up more, so pay attention,” said Mike von Massow, University of Guelph food economist.

Beef and coffee prices spiked.

Aluminum tariffs are expected to soon increase the cost of canned goods.

“One way to buffer yourselves to these cost increases is to take a look at what’s on special, what’s seasonal,” said von Massow.

The Bank of Canada will weigh the latest inflation report and the economic slowdown due to tariff uncertainty when deciding whether or not to lower interest rates again on June 4.

“Our view is that the Bank of Canada is going to cut its key policy rate from 2.75 per cent today to about two per cent by the end of the year. The timing of that is less certain,” said Parsons.

ATB thinks the Bank of Canada might hold rates on June 4, but lower them later in the year.